The Guidelines on the establishment of Labuan Securities Licensee including Islamic Securities Licensee issued by the Labuan Financial Services Authority (“FSA”) took effect on 1 January 2014.
Labuan securities licensee refers to a person who for valuable consideration provides investment advice or administrative services in respect of securities for purpose of investment and dealing in securities. For a Labuan Islamic securities licensee, its operations shall comply with Shariah principles.
The Labuan fund manager is differentiated with Labuan securities licensee, through the provision of management services, which is its principal activity. In addition, Labuan securities licensee is not allowed to hold clients’ monies or assets.
APPLICATION FOR LABUAN SECURITIES LICENSEE
Any person intending to undertake securities licensee activities may submit an application to Labuan FSA. Kensington Trust Labuan Limited is a licensed trust company in Labuan and is able to assist you with license application, establishment and administration of your Labuan company.
WHO IS ELIGIBLE TO APPLY
- An individual who holds a relevant degree or professional qualification to carry on activities of a securities licensee. Labuan FSA may also consider an applicant with at least minimum qualification of diploma holder and 3 years’ relevant experience in capital market or direct experience in the permitted activities of a securities licensee;
- A licensed/approved individual who undertakes such permitted activities from relevant regulatory and supervisory Authority or a jurisdiction who is a member of the International Organization of Securities Commission (IOSCO); or
- A person who does not fulfil the above may also be considered, provided that the Labuan securities licensee are run and managed by suitably qualified and experienced individuals.
- Maintain a paid-up capital unimpaired by losses of at least RM150,000 equivalent in any foreign currency throughout its operations. In addition, based on the securities licensee’s risk management assessment, additional capital may need to be injected to commensurate its risk profile as well as the nature and complexity of its business.
- Maintain a professional indemnity insurance policy with coverage of not less than RM1 million or its equivalent in any foreign currency throughout its operations.
- Maintain registered office in Labuan. May apply for marketing office at Kuala Lumpur and/or Iskandar Malaysia.
- Conduct its business in any foreign currency other than Ringgit Malaysia unless permitted in the Labuan Companies Act.
- Appoint approved auditor.
- Submission of audited financial statements and other statistics/information to Labuan FSA.
LABUAN SECURITIES LICENSEE LICENSE FEE
Processing Fee (once-off)
RM5,000/-. The annual license fee is payable when the license is approved by Labuan FSA and remains valid until 31 December of the year of approval. All licensees are required to pay to Labuan FSA subsequently the annual license fees on or before 15 January of each calendar year.
ADVANTAGES & KEY BENEFITS OF LABUAN SECURITIES LICENSEE
- Activities carried out by a licensed Labuan securities licensee are deemed as trading activities. The company may elect either to pay:-
- 3% of net profits as per audited accounts OR RM20,000/-
- ZERO withholding tax on payments of dividend and interest to non-residents.
- No stamp duty on all instruments relating to offshore business activities including share transfer.
- No import duty / sales tax.
- No foreign exchange controls.
- No capital gain tax / inheritance tax.
- Double Tax Agreements between Malaysia and over 70 countries.
- 50% tax abatement for expatriate professionals and managers employed under Labuan companies.
- 100% exemption for director’s fees received by non-citizen directors of Labuan companies.